The Federal Reserve Board Monday unveiled rule changes intended to curb deceptive mortgage lending practices, most of which will take effect in October 2009 and apply to all lenders whether they are supervised at the state or federal level. Although lenders have drastically cut back on the subprime loans targeted by the most restrictive of the new rules, the rules could also apply to some jumbo mortgages and alt-A loans that carry high interest rates and hamper the recovery of lending to borrowers with blemished credit. The most stringent new rules put forward by the Fed apply only to high-interest-rate loans. They include restrictions on prepayment penalties and requirements that lenders set up escrow accounts to collect payments for property taxes and homeowners' insurance on first-lien loans. The escrow requirement won't be phased in until 2010 to allow lenders time to adapt. Lenders making "higher priced" mortgage loans -- a category that covers some but not...
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